Funding of Social Security
Many people think of Social Security as just a retirement program. The official title of the Social Security Act is the Federal Old Age, Survivors and Disability Insurance Benefits Program.
It isn’t merely a tax on your earnings. It is an insurance program that serves young workers as well as retirees.
Social Security payroll deductions are essentially insurance premiums providing workers with disability coverage and survivors benefits to families if a worker dies. One out of every $3 from Social Security goes to survivors and dependents, making it the largest federal program serving children.
Some people are warning of an immediate funding crisis. No crisis is imminent! The program has been so well-managed it has amassed a surplus of more than $2.5 trillion. It is solvent for more than two decades. And the administrative costs are less than 1 percent.
There is, however, an inequality. A person making $50,000 pays fees on 100 percent of that amount, while someone making $500,000 has their income capped and only pays fees on $106,800. If we raise the cap, Social Security will become solvent far into the future.
Younger generations are entitled to this sense of security. Instead of raising the eligibility age, the government should consider raising the cap on the higher earners, eliminate the inequity, and preserve this essential program.
If you have any questions about Social Security Disability Insurance Benefits (SSDIB) or Supplemental Security Income (SSI), please contact our office.